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Young people seeking debt advice doubles in last five years

Thursday, 16 June 2016

New statistics from a national free debt advice provider found that 18-25 year-olds in the UK owe an average debt of more than £7,500.

The figures compiled by PayPlan also show that whist calls to its helpline from every other age group have decreased over the past five years, calls from 18-25 year-olds have more than doubled, with an increase of 117%.

The statistics, which do not include student loans, show that young people who sought advice had amassed average debts of £7,581.81 each. The top three causes are listed as being general overspending by taking on too much credit, reduced income, and ‘hardship’, which might include those who are temporarily homeless, single parents or recipients of benefits.

Young people in Wales were found to have the highest debt levels, with an average of £9,263.63. The lowest average was seen in Northern Ireland, but still had average financial deficits of £6,485.11 per person.

The average debt figures for 18-25 year olds in the rest of the UK continue to paint a bleak picture:

· Wales – average debt of £9,263.63.
· South East – average debt of £9,045.48.
· North East – average debt of £8,303.99.
· Yorkshire & Humberside – average debt of £7,836.87.
· North West – average debt of £7,771.34.
· South West – average debt of £7,603.58.
· East of England – average debt of £7,478.39.
· Scotland – average debt of £7,359.78.
· West Midlands – average debt of £7,080.97.
· East Midlands – average debt of £6,921.30.
· London – average debt of £6,855.61.
· Channel Islands – average debt of £6,564.42.
· Northern Ireland – average debt of £6,485.11.

Jane Clack, money advisor at PayPlan, commented on the findings: “We’re seeing an increasing number of young people starting their adult lives in debt. It’s a situation that’s getting worse and our concern is that these figures are likely to increase, as they get older.

“There’s been a lot of talk about the National Living Wage at £7.20 per hour making a big difference but that’s for people over 25. The minimum wage for 21-24 year-olds is £6.70 per hour, whilst for 18-20 year-olds it’s £5.30 per hour.

“In a way, this age group is becoming the forgotten generation when it comes to debt. It’s almost expected that young people will rack up a bit of debt whilst studying and enjoying themselves, but remember our figures exclude debt associated with the student loans company.”

Mandy Rutter, psychologist and counsellor at employee assistance and wellbeing provider Validium, believes that the results highlight the impact of a new perspective on money, combined with generations of poor financial education and debt. She explains: “Whether it’s from school or family, our financial habits are picked up at an early age. The generation in question did not receive any lessons on sensible money handling as part of the national curriculum and for those with parents struggling with their own finances, it’s not hard to see how they have fallen into budgeting problems of their own. Debt is often a generational issue.

“Add to this the concept of ‘invisible money’ - it is now easier to spend than ever with contactless payments almost everywhere, including bars and nightclubs. Young people rarely visit a branch of their bank and so hardly ever speak to a financial advisor. As money becomes less tangible, people simply can’t see their problems until it is too late and they face real trouble.”

Jane Clack added: “We need to do more to change this perception that it’s acceptable for younger people to get in to debt and that they can pay it off when they’re earning more. What if that day never comes?”

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